Short Term Disability vs. Worker’s Comp: What’s the Difference?

Short Term Disability vs. Worker’s Comp

These two benefits are similar because they both provide compensation for injuries. However, the main difference is that workers’ comp covers employees who get hurt at work, while short term disability (STD) is for injuries or illnesses that are not work related. Car accidents, sicknesses, and diseases are all common examples of things short term disability covers. The employer usually purchases STD insurance and employees contribute toward the payment.

If an employee ever needs to use their STD benefits, they may have to make it known to the company’s HR department, but the company has no say whether the employee is entitled to benefits. The STD insurance carrier makes this decision. STD payments are about two-thirds of an employees normal salary, and usually payable for about six months.

Workers’ comp insurance protects workers from loss of wages and medical expenses caused by a work-related injury. While each state has specifics requirements regarding workers’ compensation, employees have the right to benefits if they are injured while performing the functions of his or her job. Most workers’ comp insurance policies pay employees approximately two-thirds of their regular paycheck, as well as reimbursement for all medical bills and rehabilitation caused by the injury.

Choosing which benefit to apply for can be confusing. Generally, if you are hurt or get sick due to a condition on your job, you should apply for workers’ compensation benefits. If your claim is denied, then you can try to file for STD benefits. The most difficult situation for any injured employee is when both insurance companies deny the claim and point the responsibility at the other. This results in zero coverage for the individual and they may want to consult an attorney who can fight on their behalf.

A common question is whether an employee can be denied short term disability benefits if they are also seeking workers’ comp benefits. The answer is yes. Standard STD insurance policies state that workers’ comp must handle salary reimbursement where work absence is due to work-related injuries. If an employee is approved for workers’ comp benefits, they will be ineligible for STD benefits. The exception is if the workers’ comp claim is denied in which case the application for STD benefits will be considered. It is also important to note that while workers’ compensation is required, STD insurance is not and falls under the category of “benefits.”

In some situations, an employer may encourage workers to file for short term benefits for an injury sustained at work. Reasons for this may be that the employer is not 100% clear on the differences between the two types of benefits, or they are trying to save themselves money. In the case of the latter, the employer will not be subject to increased premiums if an employee seeks benefits through their STD. If you or someone you know have experienced a situation where a company is insistent that a job injury be filed under STD insurance, consult with a lawyer who can help navigate the situation.